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Endogenous determination of trade regime and bargaining outcome

We show that whether trade is one-way or two-way depends on wage strategies adopted by trade unions. The union’s wage strategy choices themselves depend upon the conditions under which trade takes place, as well as upon the characteristics of both the labour and the product markets in the trading countries. The impact of economic integration on union choices and therefore upon both labour market and trade outcomes is shown to vary according to the nature of the prevailing trade regime. We generate testable hypotheses and discuss the implications for the development of econometric tests of these hypotheses.

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Paper provided by Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick in its series CSGR Working papers series with number 40/99.

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Date of creation: Oct 1999
Date of revision:
Handle: RePEc:wck:wckewp:40/99
Contact details of provider: Postal: Centre for the Study of Globalisation and Regionalisation (CSGR) University of Warwick Coventry CV4 7AL, U.K.
Phone: +44 (0) 1203 572 533
Fax: +44 (0) 1203 572 548
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  1. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
  2. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, vol. 42(7), pages 1251-1267, July.
  3. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
  4. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-25, January.
  5. Stewart, M.B., 1989. "Union Wage Differentials, Product Market Influences And The Division Of Rents," The Warwick Economics Research Paper Series (TWERPS) 323, University of Warwick, Department of Economics.
  6. Noel Gaston & Daniel Trefler, 1994. "Protection, Trade, and Wages: Evidence from U.S. Manufacturing," ILR Review, Cornell University, ILR School, vol. 47(4), pages 574-593, July.
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